It also forecasts that 400Gbps and high speeds will comprise half of the spending with 800Gbps surpassing 400Gbps by 2025.

"However, as we look into 2023, concerns started to arise regarding the sustainability of the demand level in the market. Those concerns are fuelled by increased macro-economic uncertainties, which, combined with potential improvements in the supply situation, may put a brake on the panic purchasing behaviour we are currently experiencing in the market.”

Boujelbene expects that the data centre switch market will remain resilient to macroeconomic headwinds.

“Additionally, our interviews with value-added resellers and system integrators revealed that many vendors have implemented some sort of non-cancellation policy for their orders which should provide confidence in a strong revenue outlook, at least through the first half of next year.”

Boujelbene says Dell’Oro is optimistic about the long-term health of the market due to spending driven by cloud service providers (SPs).

“Cloud SPs are projected to comprise 60% of the spending on data centre switches by 2026 and to drive the adoption of 400Gbps, 800Gbps, and 1600Gbps speeds," added Boujelbene.

Additional highlights from the Ethernet Switch – Data Center 5-Year July 2022 Forecast Report:

The Ethernet Switch — Data Centre Five-year July 2022 Forecast Report highlights the following:

1. The availability of 800Gbps optics and 25.6T chips propelled the adoption of 800Gbps switch ports. This adoption was first spearheaded by Google. Other Cloud SPs such as Meta and Microsoft is expected to follow suit.

2. As Cloud SPs continue to migrate their networks to higher speeds, they will be making distinct choices in terms of chip capacity, switch radix, and network topology.

3. Co-packaged optics will start to ramp towards the end of our forecast horizon, but pluggable optics will continue to dominate.

This first appeared in the subscription newsletter CommsWire on 18 July 2022.